OPEC price fixing?

steingar said:
The real problem is we really know nothing about the strong and weak nuclear forces. Atomic energy is quite literally banging rocks together, and that's our state of the art. I suspect if we knew more we'd have a much easier time establishing things like fusion reactions.
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Is it banging rocks together or banging waves together, man? ;-) Far out. Groovy action at a distance dude! (Said in my best stoner voice, since I live in CO and might as well perpetrate the stereotype. Ha.)
 
Ok, more non-opec oil commentary in the opec oil thread.

The US has huge, massive known reserves of coal. we have good coal, we have bad coal, we have offshore coal(bet you didn't know that now did you?). Scotland just discovered a coal field offshore that will last 1000 years at current consumption. We need to be friendly to Scotland. Canada is sitting on billions of tons of coal also. According to some people in fedguv, coal is a bad thing(I will stop here). Well, for future generations clean coal use is going to be big, big, big business. Coal is simple, it's cheap to mine, and has great utility, but it is sooooo low tech. Oil is economically more viable right now, but some time, far in the future we will be running our cars and trucks with coal fired steam engines. Or Mr Fusion. heheheeee
 
Yeah, lots of coal, it is true. But the stuff will never provide cheap energy on the level of oil and gas. It doesn't just flow out of the ground, you have to carry it out. hard to imagine how an undersea mine would work, but where there's a will…

You do raise a good point though.
 
JoseCuervo said:
That is not how OPEC works. They don't set prices.

They set production goals for member nations. Each country has a goal of barrels per day.

Then, each country then goes home and produces more than they are allocated, as, they each need the money.

The supply of oil pumped is then dumped on the "market", where, in an efficient market, price is set based upon demand for the supply.

And, as an FYI.....
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Glad I read through 53 posts before getting to one that correctly answered the question. Now I only have to agree with you rather than explain it again.opec doesn't set prices. They adjust supply and allow the market to set the price based on demand.
 
Oil is so incredibly profitable in the middle east that it makes no sense for them to reduce their production if prices fall. They need that money to stop their people from throwing their corrupted asses out of government...which isn't a good thing in that region since often the new government is less stable and just as corrupt.

They can produce oil for a hell of a lot less than we can. Creating excess supply drops the price which then in turn limits the ability of other people (like us) that can't get oil as cheaply as they can.

This creates a pretty big problem. They can drive oil cheap enough that building our own capacity to produce oil makes no financial sense (unless the government really got behind it with incentives). Producing oil takes major investments. If the return on the investment isn't there the folks with the money will put their money into something else more profitable.

The problem is..we need oil..and if we don't have the ability to produce they then have the ability to charge us whatever the hell they want. Eventually the price goes high enough that it makes sense to try and get our own oil. Once we do that, they drive the prices down again, and the cycle repeats...

Can't say I blame them really. It's the force behind their economy and their way of life. If I were to blame anyone, it would be our government.
 
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Whelp, once again I'm going to go 'off the reservation' and disagree with the smart folks here, who clearly know more than me about this stuff. I will be praising the fedguv, so take notes.

In recent years, despite a massive increase in population, and a modest but measurable increase in the aggregate US standard or living - the US is using LESS petroleum each year. Note, that this is both less total volume of petroleum, and much less per-capita petroleum based on our rising population. Way to go US, patting myself on the back.

Now, some of this is due surely to cost. Like any commodity, as prices rise, economy plays a part in the equation, thus more Prius's on the road(Priui?), and fewer F350 crew cabs. Also, there has been continued aggregate efficiencies in all petroleum use cases. Now, as much as it pains me to admit - the fedguv has been at the vanguard of driving these numbers. Note, they don't get all the credit, but credit enough for honorable mention.
Lets look at our international counterparts, shall we? Russia(and psuedo-RS states). Have been increasing their annual petroleum consumption by massive amounts. Really, really big gains in the last decades, primarily driven by market forces as they migrate to a more capitalist friendly economy. More wealth, more Skodas, as it were. Their population increase has been modest, compared to the US so their per-cap numbers are also up. China - well, lets just use the word 'disastrous' and leave it at that. Population increasing and both per cap and aggregate petroleum use increasing rapidly. And why not? They make everything we used to make, and it takes oil to make stuff. So, I think the US is doing rather nicely WRT our oil consumption. So much so, that I got rid of my Prius, and bought -- a big truck! haha.

Oh, and as far as what OPEC does, while I thought everyone knew they were a production control mechanism, the fact is production quota is easily converted to price stability(or instability) in a commodity market like oil. So - if OPEC cuts production, prices inevitably rise and vice-versa, so production is really a proxy for the price of oil. BTW, the actual reason behind this is the way the oil market trades. All global oil trades are done in US dollars. So, since OPEC can't control the exchange rates of the dollar, they can(mostly) control the production quota, although plenty of members violate the quotas all the time, which is one of the major factors that leads to regular fluctuations in the (price) of oil.
 
docmirror said:
Whelp, once again I'm going to go 'off the reservation' and disagree with the smart folks here, who clearly know more than me about this stuff. I will be praising the fedguv, so take notes.

In recent years, despite a massive increase in population, and a modest but measurable increase in the aggregate US standard or living - the US is using LESS petroleum each year. Note, that this is both less total volume of petroleum, and much less per-capita petroleum based on our rising population. Way to go US, patting myself on the back.

Now, some of this is due surely to cost. Like any commodity, as prices rise, economy plays a part in the equation, thus more Prius's on the road(Priui?), and fewer F350 crew cabs. Also, there has been continued aggregate efficiencies in all petroleum use cases. Now, as much as it pains me to admit - the fedguv has been at the vanguard of driving these numbers. Note, they don't get all the credit, but credit enough for honorable mention.
Lets look at our international counterparts, shall we? Russia(and psuedo-RS states). Have been increasing their annual petroleum consumption by massive amounts. Really, really big gains in the last decades, primarily driven by market forces as they migrate to a more capitalist friendly economy. More wealth, more Skodas, as it were. Their population increase has been modest, compared to the US so their per-cap numbers are also up. China - well, lets just use the word 'disastrous' and leave it at that. Population increasing and both per cap and aggregate petroleum use increasing rapidly. And why not? They make everything we used to make, and it takes oil to make stuff. So, I think the US is doing rather nicely WRT our oil consumption. So much so, that I got rid of my Prius, and bought -- a big truck! haha.

Oh, and as far as what OPEC does, while I thought everyone knew they were a production control mechanism, the fact is production quota is easily converted to price stability(or instability) in a commodity market like oil. So - if OPEC cuts production, prices inevitably rise and vice-versa, so production is really a proxy for the price of oil. BTW, the actual reason behind this is the way the oil market trades. All global oil trades are done in US dollars. So, since OPEC can't control the exchange rates of the dollar, they can(mostly) control the production quota, although plenty of members violate the quotas all the time, which is one of the major factors that leads to regular fluctuations in the (price) of oil.
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Absolutely, the whole reason for OPEC is to control prices, while they don't "set" prices, they have, until recently had a lot of control over the price by squeezing off supply. The increase in US production has thrown a wrench into those works because as OPEC tries to squeeze down production, the US production has replaced it. The Saudis, seem to be the ones willing to take the hit in production to drive up the price, until recently. They are the big boys on the block, trying to kill off US production. I'm thinking it won't work, at least for the stronger suppliers. Time will tell, meanwhile, enjoy the low prices.
 
Imagine what would happen to fuel prices in the US if the Keystone pipeline were allowed to be built? I'll just leave that little objet right there...
 
docmirror said:
Imagine what would happen to fuel prices in the US if the Keystone pipeline were allowed to be built? I'll just leave that little objet right there...
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At the present time - not much effect. Crude inventories are at the moment pretty high. It isn't all that profitable for the tar sands producers to send more crude to an already saturated market.

You do realize there is an operating pipeline bringing Canadian tar sands oil to the US. Keystone would however increase capacity.

Gary
 
Clark1961 said:
Thank you for that description of the state of your knowledge.

There are several drivers behind the current oil supply and price environment. Reduced economic growth in Asia is one large driver. Fundamental supply growth in the Middle East along with returning Iraqi production to the market is also a driver. And when Iranian production (eventually) returns to the world market the supply side will be worse.

Yes, US production growth has also affected prices. That growth has not and will not continue in the current price environment. Opening more Federal lands just isn't going to do much. Check the latest US lease sales numbers to see that for yourself.
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:yes: Drill Baby Drill, isn't the answer. I'm in line with the folks here that say let's use up someone else's oil first, particularly if it is reasonably priced as it is now.

Gary
 
We are becoming an exporter of oil. Just one big game to ensure profits for stock holders. All you can do is enjoy the low prices,still not buying a twin. The cost of AV gas will go up if I buy up.
 
Gary said:
At the present time - not much effect. Crude inventories are at the moment pretty high. It isn't all that profitable for the tar sands producers to send more crude to an already saturated market.

You do realize there is an operating pipeline bringing Canadian tar sands oil to the US. Keystone would however increase capacity.

Gary
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Oh yeah, we are in an oil glut now, and will be for a while. As long as there is high tension in the ME, they need to buy guns and bullets, so they need to sell oil. I covered this quite a few posts back. A stabilized ME, where everyone over there is playing nice is anathema to low crude prices-quantities.

I do realize where the Canadian tar sands oil is going. Not just that, but Canada is in the process of building a big pipe to the eastern port on Le Fluve St Lorent. Once that's done, the oil flowing into the US will be cut by more than half, and Canada will be reaping all the profits of transport and refining. good for them, bad for us. Keystone would give us a direct faucet to the mega-refineries in S TX, and OK, benefiting the US, but no - not anymore.
 
John221us said:
A while back, I think it was Bush, we increased our storage supply of oil to protect against this very thing. I don't know what the threshold is, but at some price point/% increase the US government would release some of that to market to control pricing. So, we can play that game, too.
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You're thinking of the strategic oil reserve. However, it serves the opposite purpose - it protects against an oil shortage.

What OPEC is doing right now which suppresses US production is to flood the market. That doesn't get better by opening the strategic reserve and flooding it even more...
 
docmirror said:
Fusion - only occurs in nature in it's uncontained form, principally the Sun, but we have been successful in generating enough heat and pressure to recreate the Sun in microscopic scale with a fusion bomb, but never, ever has it been contained by nature, by man, never, ever in history.
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Not quite.

There has been contained fusion reactions in tokamak devices. The world record is the J.E.T with their 16 MW reaction for 2 seconds.

What it hasn't done so far is delivered net power - i.e. getting more power out of the fusion reaction than you need to keep the tokamak running.

J.E.T is preparing for a new record in 2018, but will still likely not be net positive, but there is no reason to think at this stage that ITER won't be positive when it finally comes online.
 
The smart money is betting that oil will go back above $100 by 2018.
We shall see. I would suggest you contain your enthusiasm for a twin until then.
Making money for the stock holders of today by exporting our gas/oil reserves will have our great grandchildren cursing us.
Having huge-huge-huge coal reserves - because Obama crushed the coal industry - will have our great grandchildren kissing his picture (the thought turns my stomach)
Once oil becomes really expensive and we have exhausted our reserves research on converting coal into liquid hydrocarbons will become the national priority.
 
My next car. Me and my ax will drive as far as we want.
 
Art VanDelay said:
So we just import because it's fun ????
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No we import because our government restricts us from maximizing our domestic energy resources.

What do you know you are either an architect, or an importer/exporter.
 
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